Online rent payments a valid option.

Not only can offering an online rent payment option to apartment residents help to cut down on administrative task time and reduce payment posting errors, but it also can put good funds into the hands of property owners more quickly than is possible through the traditional process of paper checks. Many residents are requesting the option to pay online because they are growing increasingly accustomed to paying other bills from the convenience of their homes.

Offering online rental payments at communities can enable property managers to operate more efficiently and to receive funds more expediently each month, while also providing residents an important and convenient lifestyle amenity.

The ideal online payment solution is one that residents use and is easy for managers to administer. High adoption by residents and an easy-to-manage program can translate into the highest level of efficiency for onsite staff and can provide solid return on the payment solution investment.

When choosing which online payment solution to deploy, property managers have several options:

* Automatic electronic funds transfer (usually called recurring credit or debit transactions);

* Credit card payments; and

* Resident-initiated transfer of funds.

Recurring Debit

One of the electronic payment solutions first made available in the apartment industry is recurring debit. With this method, funds are automatically deducted on a fixed schedule from a resident's bank account. Strictly speaking, the recurring debit process isn't an actual "online payment," but it is electronic and offers some distinct advantages over the traditional payment method; it's a low-cost option that protects residents from their forgetting to pay rent.

Resident adoption of this solution, however, can be low because automatic debit requires that residents relinquish both control and access to withdrawals from their checking accounts. Also, setting up, modifying or turning off automatic debit payments typically requires a significant time delay. To facilitate this method, property managers must be actively involved in the process and must invest time from their work days to do paperwork. As a result, residents cannot use automatic debiting as a last-minute payment option.

Because amounts owed by each resident might vary each month, especially if utility billing is involved, time can be wasted chasing down small balance-due amounts because such a static, fixed withdrawal system fails to address the possibility of dynamic balance situations.

For those reasons, automatic debit might not be ideal for both residents and property managers. This method doesn't offer the change access or the control over payment amounts and timing that is in the best interests of both resident and property manager.

Online Credit Card Payments

Receiving credit card payments online is generally an easy process. However, credit card payment has seen limited deployment and resident adoption in the apartment industry. This is primarily because the majority of residents pay their rent from checking accounts, with money orders or in cash. Additionally, credit card payment is an expensive option. Online card payments can cost 2 percent to 3 percent of the transaction amount to process (for example, a $30 fee on a $1,000 rent payment). In some cases, property managers require the residents to pay this fee, which naturally dampens residents' enthusiasm for this form of online payment. And regardless of who pays the fee, the cost to the property manager is further exacerbated by the likelihood of charge backs because of fraud or disputes by residents.

Resident-Initiated Funds Transfer

The third option in online rent payment is resident-initiated electronic funds transfer. With this method, residents enter their checking account information at the community's Web site (or any secure Web site designated by the community), and click to pay. The resident has the ability to choose the date on which he or she makes the payment each month and also the ability to control from which account funds are to be drawn. The resident's experience is simple, and payment instructions are delivered immediately. Funds are delivered to the community's account quickly, usually on the next business day.

This payment option meets the flexibility and last-minute payment needs of residents and allows them to manage payments based on the availability of funds. As an electronic payment, it is a low-cost solution. Additionally, residents have the option to schedule multiple payments in advance, which can help forgetful residents.

Resident-initiated online electronic funds transfer offers residents the convenience of paying exactly when they want and from anywhere they can access the Internet. It also allows other parties to make payments on their behalf without wiring transfer funds or mailing checks.

When selecting a provider, choose one whose electronic funds options extend beyond online payments and include onsite ACH check conversion. That way, payments made through the traditional method also can be converted and processed quickly.

Michael D. Radice is President of NWP Services, Irvine, Calif. He can be reached at 800/323-3178 or [e-mail].